Peter Martin

Under pressure: Treasurer Joe Hockey during question time at Parliament House in Canberra. Photo: Andrew Meares

Joe Hockey has apologised for being insensitive. He hasn’t apologised for having an at times shaky grasp on the budget he is meant to be selling.

Hockey has approached his budget radio interviews as if they were debates – high school debates. His biography says he repeatedly won high school debates, taking out his school’s public speaking prize in almost every year he was eligible to compete.

But debates are the not the same as salesmanship. They are what experimental economists call ‘'one-off’' rather than ‘'repeated'’ games.

Illustration: John Spooner

A killer point or a clever statistic will get you over the line in a debate, even if, on later examination, it turns out to be false or a misrepresentation. But it’ll hurt you in an ongoing game where you need to build trust.

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The Treasurer wasn’t trapped into saying “the poorest people either don’t have cars or actually don’t drive very far in many cases”. He volunteered it.

He was asked about something broader: whether the vulnerable, the young, the unemployed and those on pensions were getting slugged more than their fair share.

To drive the point home he said Labor and the Greens were “opposing what is meant to be, according to the Treasury, a progressive tax”.

He was almost certainly wrong about the Treasury believing the fuel excise is a progressive tax, and he hasn’t repeated the claim since. A progressive tax is one that takes a larger proportion of a taxpayer's income the higher the income is”. Petrol is a tiny proportion of a high income budget, a much larger proportion of a low income budget (where the low earner buys petrol).

What he did do later that day was to distribute ABS figures he said showed expenditure on petrol in absolute terms increased with household income, from $16.36 for the lowest 20 per cent of households to $53.87 for the highest 20 per cent.

“According to the Australian Bureau of Statistics the highest income households pay three times the amount of fuel excise than the lowest income households,” he told Fairfax Radio the next morning. “Now people can construe that whatever way they choose to, but that is what the Australian Bureau of Statistics says”.

It adjusts for this to calculate “equivalised” measures that give a better guide to resources per person.

“Equivalence scales have been devised to make adjustments to the actual incomes of households in a way that enables analysis of the relative wellbeing of households of different size and composition,” the ABS says.

The equivalence measures suggest people in high and low income households pay much closer amounts for petrol. University of Queensland economist John Quiggin says the top 20 per cent probably spend $16 per person, the bottom 20 per cent $11. It’s a small difference, and it’s even smaller considering that an Australian in the top 20 per cent earns around 5 times as much as an Australian at the bottom.

“This is the kind of mistake that’s easy enough for an individual politician to make, but Hockey has the entire resources of the Treasury at his disposal,” says Quiggin on his blog.

“If he had asked them before making his bizarre claim, I am sure Treasury officials would have warned him off. As it is, they have had to provide him with the statistics most favourable to his claim and watch him get shot down.”

In the same radio interview Hockey made a second error, also unforced.

He was asked what pensioners thought of his budget.

He said that because the carbon tax was going while the carbon tax compensation was staying , it was arguable pensioners would be better off. He then added this was “even with potential changes from male total average weekly earnings increases to consumer price index”.

His logic for saying this was that, right now “inflation increases are bigger than increases in wages”.

The budget will tie pension increases to the consumer price index alone from 2017. But the change isn’t away from male earnings, it is away from the present system which essentially offers pensioners a pick of the highest of three measures - male earnings, the consumer price index and the pensioner and beneficiary living cost index. An acknowledgement of this would have rendered his argument about how the CPI is climbing faster than wages irrelevant.

He has also wrongly reassured a chronic disease sufferer on the ABC's Q&A program that she would not be affected by the $7 co-payment and falsely claimed that his wealthy electorate of North Sydney had "one of the highest bulk-billing rates in Australia". Each of these points got him over the line on the day. Each won the interview. But being treasurer is about more than that. It’s about earning people’s trust.

I reckon that’s the real reason the budget sales job has been faltering – not because it’s unfair (and some measures are worth doing even if they are ‘unfair’ such as reintroducing petrol price indexation and jacking up the goods and services tax) but because there’s a suspicion the Treasurer is not being open with us. He is scoring points rather than telling us what he knows.

229 comments so far

If it wasn't for Clive's grandstanding, and gross vote grabbing this budget would have gone through. PUP is only blocking it to get votes. The people voted for better economic management and a balanced budget. I admire his honesty.

Commenter

Kingstondude

Location

Malaysia atm

Date and time

August 19, 2014, 12:12AM

'PUP is only blocking it to get votes.'

I agree. Clive Palmer is only interested in building his political image - as one based on common decency and belief in the basic Australian value of 'the fair go'. As a conservative politician, he is letting the side down.

Commenter

adam

Location

yarrawonga

Date and time

August 19, 2014, 6:16AM

That'd be Honest Hockey's no cuts to health, education, no new taxes and no changes to the pension I assume. I hate to also point out that 'doing it for the votes' is what democracy is all about. Hopefully Clive keeps doing what he's doing then the LNP will have to put up a real budget that undies years of Howard largess.

Commenter

Matt

Date and time

August 19, 2014, 6:23AM

Clive is only doing his job because he is sick and tired of all deceptive lying crooks being exposed in the ICAC enquiry.

He also would like to know WHEN everybody gets their $550.00 refund on electricity.

keep doing a good job Clive because nobody else is!

Commenter

Bob

Date and time

August 19, 2014, 6:41AM

KD, who are you describing as honest? I doubt it's Clive given the opening salvo, so do you mean Joe? Surely not. The article above would make me think the opposite, although I grant you it could be sheer incompetence instead. Ah, Peter maybe...yes, very revealing article, thanks!

I finished uni in the mid 90s but if there is one thing I have never forgotten is the deceptive nature of statistics, particularly broad brush figures. Heck, who doesn't know the lies, damned lies and statistics cliche! Even when I know nothing about a topic I'm wary of the misuse of statistics, but when one has some knowledge, however cursory, it can be helpful to start with the common sense test...even if you are eventually wrong about your assumptions. When I heard jHockey's words instantly I knew something didn't quite gel with my knowledge of the world. Is he really so sheltered in the shangri la of Hunters Hill that he doesn't know about low income big distance commuting?! My first guess re numbers was some conflation of number of cars in a household with total petrol use, So is it silly Joe or hoodwinking Joe?

Commenter

Passionfruit

Location

Sydney

Date and time

August 19, 2014, 6:41AM

So Kingstondude... Your argument is that this LNP budget is a "balanced budget" via LNP's "better economic management"? a) I very much doubt that a lot of average Australians would agree with you, and b) Thanks for the laugh so early in the morning.

Commenter

Jump

Date and time

August 19, 2014, 6:43AM

KD - speaking of apologies, and given the architect of the mess has kindly put his head up again this week - when do you think we can expect the Wayne Swan apology for driving the budget into the dust ?

Or at least calls for a national apology ?

Commenter

Hacka

Location

Canberra

Date and time

August 19, 2014, 6:54AM

What an amazing response to an article which details several instances of dishonesty.

I have my own statistic. Approximately 100% of 'HockeyFacts' are made up on the spot.

Hockey uses the random statistic trick all the time for exactly the purpose Martin has described, which is to put the claim out there under the assumption that if it gets picked up, it causes less damage than the benefit of the lie. The problem for him in this case was that he managed to combine his 'HockeyFact' with a statement that was so transparently stupid and offensive that it made headlines.

Commenter

BuffAndroid

Date and time

August 19, 2014, 6:54AM

You admire his Honesty?

Smokin' Joe is as honest as the rest of the LNP front bench. That is to say, in the history of Australian politics, there has never been a bigger pack of barefaced lairs in government. Without exception, everything that our current PM & front bench has said about "Budget 2014" has been either an outright lie or disinformation.

But the punters know the true reason.. because it is unfair and swayed too heavily toward those in our society who can least afford it. Other than the idiots in the LNP any politician would be a fool to pass such a budget. As the LNP will find out at the next election crafting such a budget is certain death at the polls.

The LNP have done themselves so much damage and lost so much political capital and trust that there is no way in the world they will be returned at the next election. I get out and about and am surprised at the vitriol toward the LNP by their own supporters and particularly by the young who aren't interested in politics and ,make up a large part of the "swinging" set. They are unbelievably angry at the changes to the dole, education and especially renewable energy..